If you look at styles.xml in that docx, Heading 1 has no w:outlineLvl
I see your docx was created with LibreOffice/3.5; Word would have put an w:outlineLvl value there.
Evidently Word has special logic built into it that recognises w:name/@w:val="Heading 1" as level 0:
Using xml Syntax Highlighting
<w:style w:styleId="style1" w:type="paragraph">
<w:name w:val="Heading 1"/>
Parsed in 0.000 seconds, using GeSHi
because if you change the name in styles.xml, it disappears from the navigation pane.